Pharmaceutical companies knew for decades about a family of genes that, when mutated, turned regular cells cancerous. They just couldn't figure out how to develop a drug to effectively silence those genes. Recent breakthroughs, however, suggest they're closer than ever to finding such a drug.
The progress has fueled investor optimism in companies going after these genes, known as RAS, with the most recent example coming from a California biotech named Revolution Medicines. On Tuesday, Revolution announced it's raising $238 million through an initial public offering — more than double its initial goal of $100 million.
RAS genes make special proteins that regulate how a cell grows, specializes and divides. One of these proteins, K-ras, has drawn a particularly large amount of attention since last June, when Amgen, the country's largest biotech, released data showing an experimental drug appeared to stabilize disease in a small group of lung cancer patients with KRAS gene mutations.
While presenting the surprising results, Amgen said its drug is able to get a handhold along a "hidden groove" in the K-ras protein, which is notorious for being difficult to bind to. Once attached, Amgen said its drug inactivates the protein and, in turn, disrupts the signaling pathway that grows and multiplies the mutated, cancerous cells.
Revolution is also developing drugs for a few types of KRAS mutations, though they're all in preclinical testing. Its most advanced candidate, meanwhile, just began human studies last summer.
The candidate, called RMC-4630, targets a node along the RAS signaling pathway and is in under investigation as a therapy for patients with hard-to-treat solid tumors.
Revolution's science has garnered substantial investment since it launched from Third Rock Ventures in early 2015 with $45 million in Series A financing. The biotech would go on to raise $25 million from an expanded Series A financing in December 2016, $56 million from a Series B financing in April 2018, and $100 million from a Series C financing last July.
On Jan. 17, Revolution filed a form notifying regulators it planned to go public with a $100 million stock offering. The company revised those plans by Feb. 3, with the new aim to sell 10 million shares of common stock in the price range of $14 to $16 per share.
Revolution's finalized offering sold 14 million common stock shares priced at $17 apiece, for an expected raise of $238 million. The company is also providing underwriters a 30-day option to purchase up to 2.1 million additional common stock shares.
At its public offering price, Revolution was valued at just under $1 billion. In the first few hours of trading Thursday, however, the biotech's share price surged by more than 70% to above $29 apiece.
Other companies investing in KRAS drug research include Mirati Therapeutics, Johnson & Johnson, Boehringer Ingelheim and Eli Lilly.
Mirati, which is challenging Amgen for leadership in the space, watched its share price almost double between May and late December last year. Though they have since fallen, Mirati shares were trading at close to $96 apiece Thursday, a 23% increase from the same time a year prior.